日本語

Professor, School of Economics, Kwansei Gakuin University
Visiting Professor, Graduate School of Economics and Management, Tohoku University

Professor, Institute of Social Science, The University of Tokyo

This study examines the optimal combination of emission and fuel taxes for reducing greenhouse gas emissions in oligopolies. Greenhouse gases are emitted at both the production and consumption stages (life-cycle emissions). When consumers decide how much to use products, heavier taxes should be imposed on fuel consumption than on production. In other words, a strictly positive fuel tax is necessary in addition to an effective emission tax. The combination of taxes for polluters (emission and fuel taxes) may achieve first-best optimality under market power without any explicit subsidies. We also show that the optimal fuel tax converges to zero when the number of producers becomes sufficiently large. This implies that fuel taxes may be redundant in perfectly competitive markets.